Tiffany & Co. and Blue Nile Inc. are jewelry retailers. While their products are similar, their business models differ. Tiffany & Co. sells its products primarily in high-end luxury stores. Blue Nile Inc. sells its products online only.

Moreover, the two companies finance their businesses differently. Specifically, the companies use different amounts of accounts payable, merchandise credits and deferred revenue, debt, leases, and shareholders' equity. The objective of this paper is to explain how the companies' use of liabilities and equity parallels and complements their business strategies.

Access Tiffany & Co.'s and Blue Nile Inc.'s 10-K's for 2011, 2013, and 2015 from Blackboard. You may use additional sources of information if you like.

1)Compare the principal amounts (as a percent of total assets) and maturities on their debt. Describe any notable contract terms, such as covenants, call provisions, collateral, etc. Discuss if the company issued any new debt and how the proceeds were used.

2)Compare the amounts (as a percent of total assets) and lengths of their lease and deferred rent obligations. Describe any notable contract terms, such as lease incentives or renewal rights. Capitalize the lease obligations: assume that each company's leases are 10-year amortizing debt with a 5% discount rate and annual payments. How much additional debt would appear on each company's balance sheet? Assume that the corresponding right-of-use asset equals the additional debt. By what percentage would total assets increase and by what percentage would the ratio of debt to total assets increase?